Well, like the title suggests, I went to Solstheim and started playing through quests. I went to Fort Frostmoth and when I looted the Backpack, lo and behold there was no key. I tried the wooden plate thing for like 20 min but I just couldnt quite get through. Long story short. You should have autosaves when you first come through the front door. I reloaded 2-3 times and 3rd time the key showed up.

Ps. I checked a few pages and didn't notice a thread on this, so i figured I'd post the bug fix.